Q&A: SHANDUKA BLACK UMBRELLAS - JSE MAGAZINE

Q&A: SHANDUKA BLACK UMBRELLAS

Seapei Mafoyane, Shanduka Black Umbrellas CEO, on business incubation, enterprise and supplier development and creating sustainable employment opportunities through SMEs

Q&A: SHANDUKA BLACK UMBRELLAS

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Q: What is the rationale behind Shanduka Black Umbrellas (SBU) and what is the company’s vision?
A:
Shanduka Black Umbrellas is an enterprise and supplier development business incubator that collaborates with the private sector, government and civil society to nurture 100% black-owned businesses. Its vision is to address the low levels of entrepreneurship and high failure rate of 100% black-owned businesses.

Through structured business incubation, we provide a solid foundation for entrepreneurs to enable success and minimise the odds of failing when starting and running a business.

Our ultimate objective is to accelerate high-impact, empowered businesses that can adequately respond to the country’s economic challenges.

Q: How was SBU envisioned?
A:
Black Umbrellas was conceived and established in 2005 by social entrepreneurs Charles Maisel and Mark Frankel in Cape Town. The model was adopted by the Shanduka Foundation and Shanduka Black Umbrellas was created.

Q: Why the focus on black business?
A:
SA’s painful past kept this group marginalised, and this is evident in the still subdued impact that small black business is having on the country’s economy. Research on the trends in small business development continually shows that more than 80% of small businesses fail within the first 24 months – and 90% of those are black businesses.

Reducing the failure rate of black-owned businesses will result in a direct upsurge in SMEs as a whole, seeing that this group forms the largest segment of the affected. Shanduka Black Umbrellas is an important catalyst in the development of business skills and entrepreneurship, and remains focused on ensuring that economic empowerment translates into tangible and sustainable trends for the majority of SA’s people.

Q: What do you aim to achieve with your company’s participation in the development of SMEs?
A:
We hope to inspire an economic revolution championed by SMEs with innovative, value-adding and dynamic business ventures. We want to help transition SMEs from focusing only on short-term gains and into the terrain of understanding how the work they do now plays a role in their longevity and the economic viability of the country.

We want them to understand all the factors that affect their sustainability in order to build lasting, generational dynasties.

For example, understanding that the goal as an SME is not just about securing business contracts but rather understanding the strategic impact of those contracts; and that human resources is about hiring employees who understand, believe in and promote the enterprise’s vision.

Q: What, in particular, makes your incubation programme work?
A:
We have, to date, helped more than 900 SMEs with business development support through our national network of nine incubators. These include the provision of serviced office space, computers, internet and telephones, vehicles with drivers, a compulsory reliable bookkeeping service and a structured mentorship programme.

We focus on nurturing small businesses in the critical first three years of their existence and have sustainability criteria that all entrepreneurs must ascribe to, such as creating a set number of jobs.

In essence, we are advocates of entrepreneurship that promote job creation. At the end of the three-year programme, the SMEs graduate and our hope is that they remain part of the alumni of successful businesses from which other emerging businesses can look to for advice, mentorship and potential market access. Being an entrepreneur in SA can be daunting – our programme also engages technical mentorship as an effective risk management tool.

Q: What sets your business incubator apart from others ?

A: We have a clear focus on long-term sustainability and choose to support businesses that can meet our strategic objectives, which are aligned to the country’s NDP. Other structures in SA tend to create, on average, only 1.2 jobs – compared to similar developing nations, that figure is 3.3 jobs over the same period.

Apart from the incubators in metro areas, we are also increasingly incubating small businesses in small towns such as Mooinooi near Rustenburg, and Lephalale in Limpopo, where we are witnessing excellent job growth and turnover for our SMEs.

Q: How important is it for large corporates to provide market access to SMEs?
A:
For most black-owned small businesses, access to markets remains one of the most significant challenges. If we are to achieve lasting success in this area as a country, we need to provide an enabling environment and take a measure of risk in funding SMEs.

We applaud the transformation of BEE legislation with a focus on supplier development that further helps the integration of small businesses into corporate supply chains.

Q: SBU has been at the forefront of responding to the challenges faced by small black-owned companies. What progress has been made?
A:
We continue to address challenges faced by small black-owned businesses, such as low levels of success and barriers to market entry. SBU is proud of the progress made by our SMEs and we’re honoured to be part of their journey to success.

Through our incubation programme, there’s been meaningful progress that has enabled our SMEs to access business development and corporate markets, including access to funding. As a result, our SMEs have generated a combined R1 billion turnover since the inception of our programme.

During the same period, our SMEs have provided more than 10 000 job opportunities, with in excess of 4 500 permanent jobs. We have also seen more than R55 million in taxes being ploughed back into the fiscus by our SMEs.

Q: What does that mean for the country in general and for SBU?
A:
A R1 billion turnover denotes a meaningful contribution to the economy, job creation and sustained wealth creation. Added to the growth and development agenda of the country – and in line with the NDP – small and medium-sized businesses are making inroads in reducing SA’s unemployment burden. SMEs are, without a doubt, the future game changers of economic growth in our country. We recognise that sustainable SMEs are central to achieving the NDP target of 11 million jobs by 2030.

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Q: SBU is referred to as the ‘champion’ of small black-owned businesses. How do you interpret that?
A:
What sets us apart is the clear focus that says ‘we know we cannot be everything to everyone’. We therefore choose to respond to the needs of 100% black-owned businesses, which also happens to be the greatest area of need in terms of entrepreneurial activity in the country.

For us, it means we will continue to pioneer the path to success for SMEs as we enable more opportunities to buy local, empower, create jobs and grow the economy. SMEs form the backbone of our country’s economy and we steadfastly continue with our commitment towards creating an enabling environment for small businesses because it remains an economic imperative for SA. We want to see emerging businesses move from survivalist to game changers and high-impact entrepreneurs that can grow into large corporations and employers.

Q: There is intense Collaboration with corporates across your incubators. What is the reasoning behind that?
A:
It has been proven that collaboration of our incubators with corporates has resulted in the emergence of many local black entrepreneurs. We have helped to create sustainable businesses in regions that in turn have created employment opportunities for local communities. It’s a win-win for the corporates and SMEs.

The corporates depend on us to deliver business development, mentorship and incubation support for SMEs, while the SMEs count on us to provide them with access to corporate supply chains and financing structures.

The Shanduka Blackpages enterprise and supplier development portal is another initiative that corporates can subscribe to, providing a viable platform for buyers in those organisations to connect to more than 8 000 black-owned businesses for inclusion in supply chains.

Q: Why should corporate SA partner with SBU?
A:
There is a need for greater investment and effort from corporate SA. We want to see more opportunities being created for SMEs, especially through the supply chains of large corporates.

The success and the future of the county’s black entrepreneurs hinges on corporate SA’s involvement and willingness to provide more procurement opportunities for small businesses.

We all have a part to play in building the economy of our country. We want to create SMEs that are a primary source of economic activity, a growth partner for big business and government. For corporates looking for a business incubation programme that delivers on quality results and meaningful socio-economic impact, SBU has the desired enterprise and supplier development model.

By Kerry Dimmer
Illustration: Hanlie Huisamen